Condo auction won’t happen

January 15, 2008 - 10:00 pm

One of the lenders for Newport Lofts has taken over management of the 23-story downtown luxury condo development, canceling an advertised auction of 60 units starting at $229,000, industry sources said.

A meeting between developer West Seegmiller and bank officials is scheduled for later this week, a marketing executive for the $115 million project said Monday.

“There’s been a change in ownership and the auction is not happening. That’s all I can say,” Gary Frey of Creative Sales said.

Phone calls to Fidelity in Boston and Seegmiller in Newport Beach, Calif., were not answered.

Sam Cherry, developer of nearby SoHo Lofts, helped with financing, construction and marketing of Newport Lofts under a joint venture agreement with Seegmiller. Cherry has a good business relationship with both Corus Bank, which provided the construction loan for Newport Lofts, and Breslin Builders, the general contractor.

“There’s been no direct financial impact on Cherry Development,” Cherry said. “We met all of our obligations. I think the building is in a better position today. It’s nothing specific to do with downtown. The market is what it is.”

Aaron Auxier of Luxury Realty Group said this will be a year of suffering for high-rise projects that are not located directly on or within a quarter-mile of the Strip. Buyers are demanding prime locations and buyer interest in areas away from the resort corridor has waned, he said.

“Will these areas have their day? Almost certainly. The question is when,” Auxier said.

Housing analyst Dennis Smith of Home Builders Research reported just one sale at Newport Lofts in the past six months. In July, Newport had 32 sales at an average price of $536,315.

He said a lot of high-rises are having “issues” with escrow closings.

“Regarding mid-rise and high-rise (condos), we’re just beginning to see problems come up in 2008 and 2009,” Smith said. “There’s too many investors and they’re not being able to sell or refinance those units right now.”

Smith said some projects have 50 units left to sell and developers are competing with resale units that have never been inhabited and are being offered at a lower price.

Seegmiller told the Review-Journal in September that only 44 of 168 units remained for sale at Newport, priced from the mid-$500s a square foot. He said one-fifth of the buyers are investors and the rest are second-home owners.